Differences between Commercial & Residential Property Investment

Commercial Property completely differs from residential property. The buying process, rates, rules, benefit, profit, policy, terms, locality, and formalities of commercial properties are different from those of residential properties. So, before investing in property, you should know all the pros & cons of both types of the property.

Investment in commercial property is full of exciting opportunities of profits. The basics of investment in commercial and residential property are same. Below are some key differences in commercial and residential properties:

Rent/Lease Period:

Commercial property can be rented out for longer period rather than residential property, which gives a certainty of rent income for long time. Commercial property can be leased or rented out for several years rather than 8-12 months. Commercial property rent tends to be reviewed annually, which gives an opportunity to increase rental income. The tenant for residential property can be found easily without waiting for long time. In case of commercial property investor has to wait for long period to get tenant for the property.

Tax on Property:

GST (Goods and Services Tax) have to be paid when buying a commercial property, but investor can recover this tax by including it in rent price of the property, Means, investor can impose this tax on tenant of the property.

Maintenance Cost:

The maintenance cost of commercial property is paid by the tenant, means landlord gets the complete profit of rent. Landlord/investor can impose this cost on tenant. As investor you must be sure about the maintenance cost so that there should not be any future dispute regarding the cost. in the case of residential property mostly everything is fixed in the rate of property rent.

Locality of Property:

The location of commercial property and residential property differs a lot such as location requirement of commercial property includes good transportation, big parking space, availability of manpower, easy communication, etc. But, when we talk about residential property, it includes amenities like park, schools, hospitals, consumer market, malls, security, transport, etc

Property Loan:

Process of getting loan for commercial or residential property is not similar to each other. Loan for commercial property includes various requirements, TC and policy. The interest rate of commercial property is also higher than residential property. Commercial property loan process is much time consuming, you need to map out your time before apply for loan.

Initially you need to a property so that you can invest at right place. Analysis of all differences between commercial and residential property must be done if you are confused with your investment decision.

Renowned property dealers of metro station can turn out to be an expert of real estate sector. Consultation with those property dealers cans strong your decision power of buying a property.

This post is only informative, it doesn’t relate to any legal advice.